Property developer Landsec recorded a rise in profits in its half-year results today, despite a fall in property values caused by the struggling retail sector.
Profits before tax rose to £42m, up from £34m last year.
Revenue rose 10.3 per cent to £224m compared to the same period of 2017.
Dividend per share was up 14.7 per cent to 22.6p.
Net debt remained unchanged at £3.7bn.
Landsec’s combined portfolio value dropped 1.4 per cent to £14bn.
Landsec’s increased profits come despite a fall in property values as higher rental income and reduced costs took effect.
The company said the fall in property values came largely as a result of negative sentiment in the retail sector as brick and mortar shops continue to struggle.
Intu's retail property empire saw £300m knocked off its value late last month.
Landsec, whose properties include Westgate shopping centre in Oxford and the Zig Zag building, also said its London office development pipeline increased to 2m sq ft.
“A 15 per cent increase in the dividend, a drop in property vacancies and a mere one per cent decline in net asset value per share at Landsec means that shares in the real estate investment trust are holding on to their recent gains this morning,” said Russ Mould, AJ Bell investment director.
“But with the shares trading near five-year lows and on a 38 per cent discount to their stated net asset value per share you can see why deep-value hunters could be inclined to think that an awful lot of bad news about Brexit and the decline of bricks-and-mortar retail is already factored into the valuation.”
Chief executive Robert Noel said:
Landsec has delivered a robust performance in an uncertain market. With healthy growth in earnings per share and a strong financial position, we are looking forward with confidence, introducing new concepts and growing our pipeline of development opportunities.
In retail, our focus on vibrant destinations that offer the most engaging experiences for retailers and consumers has served us well in tough market conditions. We have made good progress on plans for mixed use development at several of our suburban London assets and will be submitting planning applications which will include over 1,700 homes in two of these locations.
In London, we’ve expanded our pipeline of office development opportunities to £2bn and will be launching a new flexible office product in the new year, catering for increasing customer demand for flexible, serviced solutions.
We remain alert to market risks but are confident in our current positioning and excited about the future.